A proposed merger by UTV, between it and SMG – owners of stv – has been rejected. Yesterday afternoon, the board of SMG plc announced that not one, but two, proposals had been received from the Northern Ireland-based company.
The first offered SMG shareholders 50 per cent of the equity in the combined UTV/SMG entity; the second, 52 per cent.
UTV – owners of the Northern Ireland ITV licence and various radio stations, including Edinburgh-based talk107 – had first approached SMG with a merger proposal on the 18th of this month.
Of that first, 50-50 proposal, a SMG statement issued to the City says: “After examining the proposal in detail and having preliminary discussions with UTV’s advisers, the board of SMG unanimously decided to reject the proposal as it considered it to be unacceptable having regard to the relative market values of SMG and UTV, SMG’s prospects and the value of
its portfolio of assets. At the same time, the board of SMG explained its view on these factors to UTV and indicated its willingness to meet to discuss with the board of UTV whether a potential merger on mutually acceptable terms would be possible.”
The invitation to make a revised proposal was taken up by UTV, but it too has been rejected.
Adds the statement: “On 22 August 2006, the board of SMG received a revised merger proposal from UTV under which SMG shareholders would receive only a 52 per cent equity interest in the combined entity. The board of SMG has examined the revised proposal in detail and having had
further discussions with UTV and its advisers, the board of SMG has decided to reject the revised proposal for the reasons outlined above.”
The onus is now on UTV to come back with something that more closely reflects the value of the two companies, which the City currently judge to be circa